Are our trains to be nationalised in all but name?

The Government risks going off the rails with its hands-on approach when emergency measures end.

The recent decision by the Office of National Statistics to put train operators on the public balance sheet was much downplayed, but it is just the latest in an alarming string of signals about the direction in which the railways, and Boris Johnson’s Government, are heading.

It began when Transport Secretary Grant Shapps told a select committee in June that he intended to introduce a system of concessions – tightly specified, Government-dictated terms, with no room for innovation – across the rail network. This type of contract might work for councils contracting out the “bin emptying”, but it would remove any ability for rail operators to innovate or react to market demand. Taxpayers beware – this is nationalisation in everything but name.

Rumours are currently circulating about what the Government will do when the current Emergency Measures Agreements – hastily put in place to keep trains running when passenger numbers nosedived by 95 per cent as lockdown began – come to an end in September. One suggestion is that the Government will offer operators’ deals on such wafer-thin margins that they will struggle even to cover their overheads, thereby forcing private operators off the tracks. Train companies’ pleas for the Government to include incentives for them to regrow passenger numbers in their contracts have apparently been rejected. This is utterly perplexing; the DfT calls for innovation, yet seems devoid of any purposeful ideas itself.

Then came the idea last week that Network Rail, the state-owned infrastructure company that oversees 20,000 miles of track, could be put in charge of running the entire system, including letting contracts for passenger services. Rail executives understandably baulked at the prospect of a company with a history of profligacy and delays being put in total charge. Its corporate culture is entirely focused on looking after the track infrastructure, not passengers, when it is the latter that is crucial to the commercial recovery of the sector.

Industry sources often describe a government – or rather a civil service – which enjoys “playing trains”, with its hands firmly glued to the signal box levers, and a beefed-up Network Rail by its side. In one sense you can see the logic, however misconceived and financially crippling to taxpayers it might be. By holding the purse strings, ministers could enact policy changes swiftly, without needing to negotiate at length with 20 different companies as used to be the case. The real danger, however, is the shift from an alliance of private sector “customer focused” experts and experienced railway operators to Whitehall pen pushers deciding everything from train stopping patterns to the colour of the coffee cups.

Under this regime the railway risks becoming mired in bureaucracy. Worried senior figures have told me that currently-swift decisions on ticket refunds – usually taken within hours by operators – are to be replaced by two separate committees of civil servants, followed by ministerial approval. The whole process is estimated to take weeks, hardly the makings of a brave new responsive “customer centric” world so espoused by the DfT of late.

Reform of the railway is sorely needed. Long before the pandemic shattered the industry’s finances, the relationship between the Government and private operators was hanging by a thread. Given the extent to which operators are now reliant on public money, the temptation for meddling by the state is understandable, but it must be resisted firmly if the sector is to recover.

The Exchequer, which is currently pouring in an extra £800million a month to keep the trains running, must act quickly and delve deep into the DfTs motives to avoid exposing the taxpayer to a bottomless pit of funding for a distinctly unappetising outcome that will please nobody.

The ability to spot an opportunity, take a risk and reap the rewards will be crucial. In my own small way I know this all too well, having just set up the UK’s first ever multi train-timetabled dedicated tourist rail service, in North Yorkshire dubbed “The Staycation Express”. In its first week the business received widespread press coverage at home and abroad, garnering enthusiastic support from councils, MPs, tourism bodies and local businesses. By adopting a genuinely customer-centric approach and lateral entrepreneurial thinking we saw bookings grow by 550 per cent in the first week. This is what can be achieved if only closed political minds could be opened.

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